Spectacle Entertainment has a fitting name. It’s been a spectacle for the past couple of years, with gaming regulators and law enforcement in Indiana investigating several people linked to the company for breaking the law. A rule recently issued by the Indiana Gaming Commission (IGC) could cause additional problems for the company, as well as Hard Rock International. The Hard Rock Northern Indiana only recently opened in Gary, IN, but might not be around much longer if Spectacle shareholders continue to make a spectacle of themselves.
Hard Rock Facing Hard Times in Indiana
This past March, in no small part due to the issues surrounding Spectacle in the past, the IGC passed a new rule that requires casino investors to submit data related to their finances and background. Seven shareholders have decided they don’t like the rule and are challenging it in court; however, without compliance by the shareholders, according to the rule, the casino’s license could be in jeopardy. The property only opened on May 14 of this year.
The integrity rule was established to try to bring back confidence in Indiana’s gaming market, which has suffered since a former state senator, Brent Waltz, and Spectacle’s former VP, John Keeler, were indicted over illegal corporate contributions linked to Waltz’s political aspirations. The allegations arose while Keeler was the VP and general counsel for New Centaur LLC, a precursor to Spectacle. Both companies were founded by Rod Ratcliff, who has also come under fire for his association with Keeler and Waltz. Radcliff already gave up his casino license after initially trying to fight the matter in court.
The Legal Fight Over Integrity Continues
One of the shareholders complained about having to turn over the data because he would need around 80 hours to complete the forms involved. He argues that, since he has no direct involvement with the casino operations and is only an investor, he shouldn’t have to supply the data. The shareholder spent $2.5 million to buy 4% of the company three years ago, and he likely already has someone on his payroll responsible for handling finances.
The new CEO of Spectacle, Jahnae Erpenbach, is trying to impress upon the shareholders the need to comply with the rule even as it is being disputed in court. She contacted them last week to determine whether they were going to submit the information, adding that those who don’t by June 21 risk having their shares automatically repurchased by the company in accordance with the rule. Spectacle would be able to buy the shares at either the current market price or the original purchase price, depending on which is lower.
It isn’t clear how many of the shareholders have responded, but the fact that the case is still being heard in court is likely an indication that several investors don’t plan on complying, which could jeopardize the casino and Hard Rock’s image in the state. Initial arguments were heard on May 14 and a decision was expected on June 4, but more time was given by the judge to allow additional documents to be presented. The final ruling may not be given until after June 24, when the IGC is expected to meet and discuss the license renewal for the casino.